When IRS Criminal Investigation Calls, Speak With Counsel First.
A criminal tax investigation is conducted by special agents of IRS Criminal Investigation and can lead to prosecution by the Department of Justice. We advise individuals and businesses from the first contact, before statements are made or documents are produced.
Civil and Criminal Matters
Civil Examinations
Conducted by revenue agents and tax compliance officers to determine the correct tax, penalties and interest. Most IRS examinations are civil.
Criminal Investigations
Conducted by special agents, who are federal law enforcement officers, to determine whether a crime was committed. The government must prove willfulness: the voluntary, intentional violation of a known legal duty.
Principal Criminal Tax Statutes
Tax evasion (IRC §7201)
A felony punishable by up to five years in prison.
False return (IRC §7206(1))
A felony punishable by up to three years in prison.
Willful failure to file, pay or keep records (IRC §7203)
A misdemeanor punishable by up to one year in prison.
FBAR violations (31 U.S.C. §5322)
Up to five years in prison, or up to ten years in aggravated cases.
For the most significant tax offenses, including evasion and willful failure to file, prosecution generally must begin within six years (IRC §6531).
If You Are Contacted
Obtain advice before answering questions
Special agents may visit a home or business unannounced. You may decline to answer questions and ask to speak with counsel, and statements made at that stage can be used later.
Preserve records
Do not alter, destroy or move documents or electronic records.
Subpoenas and summonses
A grand jury subpoena or an IRS summons has its own rules and deadlines. Responding properly, and asserting any applicable privileges, requires care.
Accountants and advisors
The limited privilege for CPAs and enrolled agents under IRC §7525 does not apply in criminal matters, and an accountant can be required to testify. Where an accountant’s help is needed, it is generally arranged through counsel.
Voluntary Disclosure
For taxpayers who are not yet under examination or investigation, IRS Criminal Investigation’s Voluntary Disclosure Practice may be an option. A disclosure must be timely, begins with a preclearance request on Form 14457, and does not guarantee immunity from prosecution.
Contacted by a Special Agent?
Contact Advantage Tax Law for a confidential consultation before you respond.